| Yatharth Hospital And Trauma Care Services Limited | ||||
| Rating reaffirmed at 'CRISIL BBB/Stable'; Rated amount enhanced for Bank Debt | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has reaffirmed its ‘CRISIL BBB/Stable’ rating on the long-term bank facilities of Yatharth Hospital And Trauma Care Services Limited (Yatharth Hospital; part of the Yatharth group).
The rating continues to reflect the extensive experience of the promoters in the healthcare industry, diversified service offerings and healthy debt protection metrics of the group. Revenue of the group increased significantly to around Rs 400 crore in fiscal 2022 from Rs 228 crore in fiscal 2021 and is expected to grow at a healthy rate in the near term, supported by ramp-up of operations at the newly acquired RamRaja Hospital in Jhansi. Operating profitability is expected to remain healthy and should sustain at more than 25% over the medium term. However, stabilisation of operations of the new hospitals remains critical and is a key monitorable.
These strengths are partially offset by geographic concentration in revenue, susceptibility to risks related to stabilisation of operations and regulatory changes and exposure to intense competition. |
Analytical approach CRISIL Ratings has combined the business and financial risk profiles of Yatharth Hospital and its 100% subsidiaries, AKS Medical and Research Centre Pvt Ltd (AKS) and RamRaja Multispecialty Hospital & Trauma Centre Pvt Ltd (RamRaja, acquired by Yatharth Hospital in fiscal 2022), together referred to herein as the Yatharth group. This is because the companies have significant operational, financial and managerial integration and operate under a common brand.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key rating drivers and detailed description Strengths: Extensive experience of the promoters The two-decade-long experience of the promoters in the healthcare industry, their strong understanding of the market dynamics and healthy business relationships in the region will continue to support the business risk profile. The group has been offering multi-specialty primary healthcare services since 2010 and has one hospital each in Noida and Greater Noida in Uttar Pradesh, with total capacity of 650 hospital beds under Yatharth Hospital. The hospital under AKS is the group’s third hospital in Noida Extension; it began operations in fiscal 2020 and has capacity of 450 hospitals beds. The company acquired a new hospital in fiscal 2022, RamRaja in Jhansi, with capacity of 305 hospitals beds. The business acumen of the promoters has helped increase consolidated revenue to an estimated Rs 400 crore in fiscal 2022 (Yatharth Hospital contributing around 75%) from Rs 228 crore in fiscal 2021 and Rs 146 crore in fiscal 2020.
With increase in revenue, operating profitability of the group is estimated at 28-29% in fiscal 2022 as well as over the medium term.
Diversified service offerings The company offers a wide range of medical services under Yatharth Hospital, including medical oncology, surgical oncology, interventional cardiology, cardio thoracic and vascular surgery, urology and nephrology, orthopaedics, neurology, gastroenterology and others. The group has further diversified its service offering with introduction of medical services such as radiation oncology, human organ transplant, robotics surgery and medical tourism in Yatharth Hospital and RamRaja from fiscal 2023 onwards, and this shall support business growth of the group over the medium term.
Healthy debt protection metrics Debt protection metrics have been comfortable despite high leverage because of moderately healthy profitability, which is estimated at 28-29% in fiscal 2022 (27% in the previous fiscal) and above 25% over the medium term. Interest coverage and net cash accrual to total debt ratios are estimated at more than 3.8 times and 0.30 time, respectively, in fiscal 2022 (against 3.58 times and 0.23 time, respectively, in fiscal 2021). The metrics will likely remain healthy in the near term.
Weaknesses: Susceptibility to risks related to stabilisation and ramp-up of operations at new hospitals Having started operations with one hospital in 2010, based out of Greater Noida, the group subsequently expanded its reach to different territories, such as Noida, Noida Extension and Jhansi, and currently operates four hospitals. However, the revenue of the group depends largely on the older hospitals in Noida and Greater Noida. The hospital under AKS began operations in May 2019 has successfully ramped up its operations. However, RamRaja, which began operations in April 2022, could take a few years to stabilise operations. Further scalability of the newly setup hospitals (AKS and RamRaja) and stable growth in older hospitals (Yatharth Hospital) will remain key monitorables over the medium term.
Skilled doctors, nurses and staff are critical in the healthcare industry. The Yatharth group observed high attrition rate of doctors at over 65% in fiscal 2021 and the six months through fiscal 2022. Retention of skilled professionals and sustenance of the cost of skilled manpower in hospitals will remain key factors for sustenance of healthy performance over the medium term.
Geographic concentration in revenue Operations are localised in North India compared with other corporate hospitals, which have presence across India. The three hospitals are in and around Noida, rendering the group susceptible to the dynamics of a single market. The group is also exposed to competition arising from the entry of other big players in the region. However, entering into Jhansi with the newly acquired hospital shall diversify the geographical presence of the company to a certain extent.
Exposure to intense competition in the healthcare industry and regulatory changes The Yatharth group faces intense competition, as the Delhi-NCR healthcare industry is highly competitive, as indicated by the presence of large established hospitals. Moreover, ability of the group to offer new medical services with advanced technologies to its patients would be a key factor for improved performance over the medium term.
Furthermore, the healthcare industry is susceptible to government guidelines related to medical practices, such as disposal of solid waste and timely renewals of approvals, licenses and permits. Any increase in compliance cost or regulatory changes may adversely affect the business and financial operations of the group over the medium term. |
Liquidity: Adequate Consolidated net cash accrual is expected at Rs 70-90 crore per annum, which is sufficient vis-à-vis yearly debt obligation of Rs 24-38 crore over the medium term. Current ratio of the group was modest at 1.06 times on March 31, 2021, and is estimated at 1.9 times as on March 31, 2022. Yatharth Hospital also had around Rs 5 crore in unencumbered fixed deposits as on June 30, 2021. |
Outlook: Stable The Yatharth Hospitals group will continue to benefit from the extensive experience of the promoters and its established brand. |
Rating sensitivity factors Upward factors
Downward factors
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About the group Incorporated in 2008, Yatharth Hospital operates one hospital each in Greater Noida (operations began in 2010) and Noida (operations began in 2013). The company holds 100% stake in AKS and RamRaja. Dr Ajay Tyagi and Dr Kapil Tyagi are the promoters of the company.
Incorporated in 2009, AKS operates a 450-bed multi-speciality hospital in Noida Extension. The company is a wholly owned subsidiary of Yatharth Hospital. It began operations in May 2019.
Incorporated in 2012, RamRaja operates a hospital in Jhansi and was acquired by Yatharth Hospital in fiscal 2022. Operations commenced from April 2022.
All three hospitals of the group (two under Yatharth Hospital, one under AKS and one under RamRaja) operate under the Yatharth Hospitals brand. |
Key financial indicators
Consolidated |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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This Annexure has been updated on 31-May-2022 in line with the lender-wise facility details as on 04-Aug-2021 received from the rated entity.
Criteria Details
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